Compliance activities

Operations

The AGCO promotes compliance with relevant legislation, regulations and Registrar’s Standards to protect the public interest and align with government and ministry priorities. The AGCO undertakes a number of core regulatory activities which enable the agency to effectively fulfill its mandate in Ontario’s alcohol, lottery and gaming, horse racing, cannabis and internet gaming sectors.

The AGCO delivers regulatory services in a manner that is evidence-based, risk-based and outcomes-focused while being as efficient as possible. Compliance Services respond to and proactively address compliance concerns when and where they occur, taking a multi-sector approach to reach desired regulatory outcomes. In addition, the financial investigations team conduct due diligence in support of licensing and registration processes and financial investigations regarding allegations of fraud. These branches conduct regulatory compliance activities across all industries and sectors that the AGCO regulates, including delivery of education, inspections, compliance reviews, along with audits and financial investigations across these sectors.

The AGCO inspects, monitors and educates to ensure compliance with applicable laws and regulations. The AGCO’s compliance approach is risk-based and outcome-focused. Risk-based refers to the regulatory risks underlying the Standards, regulations, laws and requirements. A risk-based compliance approach focuses the greatest resources on mitigating the highest risk areas. Outcome-focused means emphasizing the results that regulated sectors are meant to achieve, rather than prescriptive activities that must be carried out.

The AGCO’s compliance approach emphasizes monitoring through a series of inspection activities, including unannounced inspections, responding to police reports and evaluating regulatory submissions and public complaints. The AGCO also conducts ongoing regulatory assurance activities, including regular audits, compliance reviews and mystery shopper visits. 

The Data Driven Compliance pilot application to better use data to inform and provide inspectors with intelligence of entities with the greatest likelihood of non-compliance activities in the liquor sector was launched in June 2022. The application allows the AGCO to strengthen the planning of high-impact compliance activities by providing Inspectors with the tools they need to focus on liquor licences that are anticipated to have the greatest likelihood of non-compliance. The application automates a significant portion of the research that Inspectors previously completed manually.

In the horse racing sector, the AGCO ensures compliance with the Rules of Racing by reviewing alleged rule infractions and having Race Officials present to officiate races. The AGCO supports the health and welfare of horses and horse racing participants by monitoring and enforcing the Equine Medication and Drug Control Program and ensuring an official veterinarian is in attendance to supervise live racing.

 

Partnerships

To support a coordinated approach to compliance activities, the AGCO’s compliance approach places significant emphasis on working with local community partners, including police, fire services, municipal by-law and public health units. In the liquor sector, this work also includes administering the Police Report and Last Drink Programs in partnership with the police.

 

Mystery Shopper Program

The use of mystery shoppers in the grocery sector continues to be an effective tool to aid in evaluating how grocery stores are performing in preventing youth access to alcohol. Throughout 2022–23, the AGCO expanded the Mystery Shopper Program to cover all liquor licensees operating within the province.

To adequately assess the sector’s ability to prevent youth access to cannabis products, the AGCO continues to use the Mystery Shopper Program to identify retailers who present an increased risk of permitting youth access. During this fiscal year, the AGCO enhanced the Mystery Shopper Program to support enhanced oversight of cannabis retailers operating close to high schools.

 

Educational activities

The AGCO proactively provides education to all sectors to increase their understanding of regulatory obligations and improve overall compliance. All new licensees or authorization holders in the liquor and cannabis sectors receive this education. In addition, any licensee or authorization holder can take advantage of these opportunities at any time throughout the life cycle of their licence.

Please note that all information in the following tables has been adjusted to align with the new methodology of categorizing inspections that was implemented in fiscal year 2021–2022.The category “Miscellaneous Compliance Activity” includes but is not limited to compliance activity driven by intelligence or investigation activity, the Mystery Shopper Program or criminal charges.

Table 17—Compliance Services inspections—Alcohol

 

Table 18—Compliance Services inspections—Lottery retailers

 

Table 19—Compliance Services inspections—Raffles

 

Table 20—Compliance Services inspections—Cannabis

 

Table 21—Cannabis private retail inspections

 

Table 22—Compliance Services inspections—Horse racing

 

Table 23—Rulings by Racing Officials

 

Technology regulation and igaming compliance

Ontario’s public confidence in gaming is supported by the AGCO’s delivery of a modern igaming compliance program that oversees all aspects of regulatory compliance in internet gaming. The agency ensures the technical integrity of gaming technology by developing minimum technical standards that products must comply with and by testing and providing approvals of games and related gaming systems against those standards. This technology is used throughout the province in all gaming industries and sectors regulated by the AGCO, including casino gaming, charitable and raffle gaming, and lotteries. However, for internet gaming, the AGCO has modernized the approach whereby the AGCO oversees the certification of internet gaming technology against the Registrar’s Standards for Internet Gaming by registered independent test labs rather than testing this technology inhouse and providing AGCO approvals.

The AGCO’s Gaming Lab is accredited to the international standard ISO 17025:2017 for testing laboratories, considered the international benchmark for excellence in testing laboratories. This achievement sets the AGCO apart as the only known gaming regulator with an in-house accredited gaming laboratory. This accreditation provides annual third-party assurance of the ongoing quality of the testing performed by the Gaming Lab.

In 2022–23, the Gaming Lab conducted its annual survey of regulated entities, reaching out to Operators to request their anonymous evaluation and feedback. Seven (7) Operators responded to the survey, with 100 percent of responses indicating the Gaming Lab does either an excellent or very good job of satisfying its mandate of providing expert technical services and approvals supporting the regulation of gaming technology in accordance with the principles of integrity and public interest. The Gaming Lab will conduct its annual survey in 2023–24 to gather valuable feedback from regulated Gaming Related Suppliers to enable it to continue to provide industry-leading services.

Table 24—Gaming Lab

 

iGaming Compliance

In 2022–23, the Technology Regulation and iGaming Compliance Branch successfully implemented a new internet gaming (igaming) compliance program to oversee all aspects of regulatory compliance of the igaming open market that launched in April 2022. This includes functionality to produce sector-level compliance information, analysis, plans and priorities to direct compliance teams; the delivery of high-quality, impartial and independent services that assess and certify gaming technology products for use in Ontario; and a full suite of modern and effective compliance assurance activities that address compliance priorities and provide reasonable assurance of compliance for regulated internet gaming entities and technology. These areas lead a low-burden, priority-driven compliance program in the internet gaming space.

Along with the development of the AGCO’s regulatory model for igaming, the priorities for igaming compliance in 2022–23 were:

• Responsible Advertising—oversight of potentially harmful public advertising and messaging. Ontario prohibits the broad, public advertising of bonuses, credits and other gambling inducements.
• Responsible Gambling—protection of players from experiencing harm from gambling.
• Sport and Event Betting—new line of business for Ontario that launched with iGO on April 4, 2022.
• Game Integrity—requiring certification of all games and critical gaming systems linked to determination of game outcome.